The difference between the worldly-wise and those less aware usually boils down to one thing - a keen understanding of where power emanates from in the world.
Some know it, many don’t. In between these polar opposites are the masses that know something is going on, without being quite so sure. For them, the cottage industry of Conspiracy Theorism abounds. Is everything being programmed in a ‘matrix’ of simulation? Or is it more likely that a shadowy group of powerful men actually run the world? In this second corridor of hushed speculation thrive the ideas around secret societies - The Illuminati, The Freemasons, The Priory of Sion.
The economic historian Niall Fergusson demolished these theories in his 2017 masterwork on the history of networks (The Square and the Tower), leaving a vast vacuum within which Javier Blas and Jack Farchy, two of the world’s best-known journalists covering energy, commodities and trading houses, have stepped in.
As veterans of this world, and staff at Bloomberg News, they have spent their professional lives covering a hidden and covert network of operators previously shielded from public view - commodity traders. This yawn-inducing classification belies their power, influence and control of the modern world. The distillation of their investigation is a magisterial work of journalism called The World For Sale: Money, Power and the Traders who barter the Earth’s Resources. The pages of this collaborative venture ripple with staggering facts and fortunes.
World their playground
Consider this - the world’s trade in goods and commodities rose from $60 Billion after the Second World War to a stratospheric $17 Trillion in 2017. A quarter of this is made up by commodities and provides the playground for commodity traders. Specifically, the four largest trading houses that have dominated the field globally, generating a combined turnover of over $725 billion - more than the total exports of Japan.
More bizarrely for those of us distracted by Silicon Valley’s clutch of billionaires, these companies have concentrated unspeakable wealth in even fewer hands. Names that rarely grace the covers of financial publications or lips at cocktail parties. Names like Marc Rich & Co., Vitol, Glencore, Louis Dreyfus, and Cargill have created a small class of billionaires shielded from public celebrity.
The World For Sale connects the dots from the unlikely origins of these enormous riches through its various shapes over the last few decades. The story is always uncannily similar. Some seismic shift in geo-political power creates disruption and uncertainty. Into these turbulent and uncertain waters wade the commodity traders to acts as financiers of last resort to powerful potentates, dictators, or authoritarian regimes. For their ability to provide cash flow, they corner valuable commodities like oil, copper, bauxite, sugar and then, after patiently waiting out the crisis, sell the commodity at an extortionist profit.
What this simple narrative conceals, however, is the ungodly appetite for risk commodity traders absorb. Keeping the gears of global trade winding on sometimes has fatal consequences when you deal with power-mad demagogues. For the most part, however, commodity traders are ensconced in droll, tax-free Swiss towns like Zug, filling their coffers with embarrassingly generous rewards for their unquenchable thirst for monetary gain.
The authors unravel in engaging reportage, the four historical inflection points that have aided this phenomenon. The first was the wave of nationalisations across the Middle East of the 1970s that opened up the market for, amongst other things, oil. The second and third would have a deeper geo-political influence that still slathers foreign policy with slick black gold (oil) to fan the anxieties of nation states on the subject of energy security. Namely, the breaking up of the Soviet Union and the ascendancy of China due to mass industrialisation.
Add to this the fourth major shift - the globalisation and finance and the flywheel of supernormal profits generated by cornering commodity markets was set to yield spectacular wealth in the opaque corners of global trade.
As cogs in the wheel of global trade, commodity traders have been variously glamorous or discreet depending on their personal disposition. What Blas and Farchy place under the microscope is their political nexus across frontier markets. Funnelling financing so that sanctioned dictatorships like Cuba could continue to buy what they needed, like oil, while offering the commodity traders cut-price sugar to be traded internationally at exorbitant prices. It didn’t matter what the commodity was, food, minerals or metals. If it could find a buyer somewhere in the world, the traders have been at hand to broker deals that offered them an unfair price advantage through inventive forms of cartelisation.
The consequences of all this wheeling and dealing wasn’t something to scoff at either. In the 1979 oil crisis, one commodity trading company would rank as one of America’s ten most profitable companies. Similarly, during the China-led commodity boom, the combined profits of the three largest commodity traders would eclipse that of better known mega-corporations like Apple and Coca-Cola. Even more recently, in the first decade of the 2000s, the largest commodity trading houses’ combined net income would be enough to buy Goldman Sachs or Boeing.
As with any lucrative ‘hustle’, the commodity trading world is not without its darker side as the authors artfully reveal. Dealing with mercurial warlords disguised as politicians or plunging into flashpoints for civil strife come with their own, sometimes, fatal risk. As does the fuelling of a ‘profits-at-all-costs’ culture that would breed the likes of Enron. The world of commodity trading would breed a brand of radical capitalism that the authors hold up as a cautionary tale. Nevertheless, with mind-boggling fiscal fortunes at stake, large energy companies and nation states themselves have encroached upon the traditional territory that commodity traders once occupied.
What the book does not find room to focus on enough is the impact commodity traders have on our everyday lives. As a ‘factory’ for billionaires, companies like Glendora concentrate enormous wealth for a few, aggravating an already yawning income gap that prefigures social unrest. Such as the cornering of food and fuel, that raises the cost of everyday living to intolerable levels. Or, the ethically dubious dealings that prolong civil wars. These elements are alluded to, but they hold a deeper significance to lay readers.
Nonetheless, The World for Sale is an important treatise on what happens when governments overlook an incorrigibly amoral cabal of bad brokers. It also serves notice to journalists whose fascination with the more visible layer of tech behemoths may have blinded them to the machinations of those who actually control the locus of real power in the world. For the first time, we now know that that is no conspiracy theory at all.
(The reviewer is Vice-President, Corporate Brand and Marketing, Tata Sons, views are personal)
Check the book on Amazon here.